Assistant Commissioner of Income Tax Central Circle 6 4, 1925, 19th floor, Air India Building, Nariman Point, Mumbai-400021. Vs. Indiabulls Housing Finance Limited

Parties Involved

Facts Summary

The assessee, Indiabulls Housing Finance Limited, is a Housing Finance Company engaged in the business of money lending to Housing and earned interest thereon. The assessee e-filed its original return of income on 14.03.2022, declaring total income at Rs. 1249,24,66,610/-. The return was revised on 31.03.2022, declaring the same total income. The return was processed on 01.07.2022 and 22.09.2022 under section 143(1) of the Act. The return was selected for scrutiny under CASS due to substantial purchases from suppliers who are either non-filers or have filed non-business ITR 1,2 or reflected a substantially lower turnover in ITR. Statutory notices under sections 143(2) and 142(1) of the Act were issued and served upon the assessee. The assessing officer noticed that the assessee had claimed exempt income of Rs. 19,27,537/-. The assessee had suo-moto disallowed a sum of Rs. 3,90,767/- related to the earning of exempt income. The assessing officer computed the disallowance at Rs. 2,10,06,767/- under section 14A r/w Rule 8D and added the balance amount of Rs. 2,06,16,000/- to the total income of the assessee. Penalty of Rs. 24,10,000/- imposed by NHB was also disallowed under section 37 of the Act and added to the income of the assessee.…

Legal Issues

• 1. Whether learned CIT(A) is justified in holding that the investments, which yielded exempt income, are only to be considered for the purpose of disallowance u/s. 14A r/w Rule 8 D(2) and to exclude such investments which did not earn exempt income?
• 2. Whether learned CIT(A) is justified in holding that the penal charges paid to NHB are allowable as business expenditure?

Judgment Outcome

Decided in favour of Assessee.

Precedents Relied Upon

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